Athene commits to FIAs and ‘custom indices’ as it dominates annuity sales

Athene Life and Annuity maintains a Secretariat-like lead over the field in annuity sales, but the insurer still sees turbulence within its product mix.

Athene executives met with Wall Street analysts Thursday to pull back the curtain on its first-quarter financial numbers. In 2023, Athene nearly lapped the field with $35.5 billion in annuity sales, with MassMutual ($24.7 billion) and Corebridge Financial ($23.6 billion) rounding out the top three.

Those good sales vibes continued through the first quarter, said Grant Kvalheim, president of Athene, with quarterly records set for registered indexed-linked and fixed indexed annuity sales. Those products saw sequential quarterly sales increases of 45% and 32%, respectively, he said.

Conversely, Athene backed away from multi-year guaranteed annuity products, Kvalheim explained, which fell by 50%. Since MYGAs are mainly rate driven, Athene made a conscious choice to veer away from the product, he added.

"I'd like to emphasize the importance of this mix shift," Kvalhaim said. "The weighted average life of our MYGAs is about five years. For our FIAs suite, it ranges from nine to 19 years with our two largest-selling FIAs having weighted average lives of 10-plus and 14-plus years. Spreads are strong across all our products but the point is we get to earn spread two to three times longer on a FIA sale versus a MYGA sale."

Athene's annuity business is one of the main engines driving parent Apollo Global Management. Last week, Apollo reported total revenue of $7 billion, up from $5.3 billion in the year-ago quarter, but down from $11 billion in the fourth quarter 2022. The sequential decline was mainly driven by declines in premiums and investment-related gains.

'Custom indices' in FIA space

Athene is drawn its share of criticism for bringing a private-equity investment attitude to the life and annuity space. But Jim Belardi, CEO and chairman of the board, said the company is meeting an desperate need for retirement products for millions of Americans.

"This need is prevalent everywhere in the world," he said. "The retirement crisis in the U.S. is particularly acute, with retirees facing an estimated retirement savings shortfall of $3.7 trillion. The reason for the lack of preparedness is twofold: not enough savings, and too low of a return on those savings."

Fixed annuities are the "best retirement vehicle" to address the crisis, Belardi said. The products are also good for Athene.

"Our strategy in the FIA space is focusing on custom indices that optimize product performance and deliver superior long-term value to our clients seeking protected accumulation and guaranteed income," Kvalheim said.

The company boasted 1,300 producers who sold an Athene annuity for the first time during Q1, he added. Banks and broker-dealers were responsible for 70% of Athene sales, while independent marketing organizations handled the remaining 30%, Kvalheim said.

Athene will continue to grow, he promised: "At the end of the quarter, we launched on the Morgan Stanley platform, with plans for several additional institutional launches in the second half of 2024."

No worries about the DOL

Echoing the thoughts of other non-traditional companies in the insurance space, Athene executives expressed little concern about the Department of Labor fiduciary rule, known as the Retirement Security Rule.

Published on April 25, the rule was challenged in a Texas federal court one week later. It will again attempt to extend fiduciary status to most sales of annuity products.

"We are assessing the final rule but do not expect a material sales impact," Kvalheim said. "The demand for retirement income solutions is there. The DOL rule may require changes in how that need is met, but it does not change the need. Athene and other insurers prepared to comply with the original fiduciary rule seven years ago and will do so again if we are required."

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.